Malaysia has begun implementing Regional Comprehensive Economic Partnership that came into force on Jan. 1, 2022
* The writer is Ambassador of Malaysia to the Republic of Turkiye
Malaysia is a country with a rich history and culture that sits in the heart of Southeast Asia. This Southeast Asian country touts as one of the most developed and advanced countries in Asia. With a population of 32 million, a GDP per capita of USD10,600 and an unemployment rate of 4.2%, Malaysia has set its sight to reclaim its place as one of the most attractive trade and investment destinations in Asia.
The country and its people have bravely overcome the outbreak of COVID-19, and recently, the Honorable Dato’ Sri Ismail Sabri, Prime Minister of Malaysia, has made an important announcement that the country will open its border on April 1, 2022. Fully vaccinated travelers will no longer be required to quarantine when entering Malaysia.
As a trading post, Malaysia’s history is deeply rooted in the development of Southeast Asia. As early as 1500, the Malacca Sultanate was well known as an important port and trading city for travellers and merchants from China, India and the Arab world. Malacca’s outstanding status as a trading center and meeting point also captured the attention of European powers. When the Portuguese attacked the Malacca Sultanate in 1511, the conquest was not only to curtail Islam and its influence in Southeast Asia, but this European power was also aiming to replace the Sultanate with its own presence and dominate the busy trade route that traversed through the Malacca Strait.
Today, Malaysia continues to be known as a center for trade and investment. Along with other Southeast Asian and Asian countries, Malaysia has begun implementing the Regional Comprehensive Economic Partnership (RCEP) that came into force on Jan. 1, 2022. Known as the biggest free trade zone in history, RCEP would allow investors to reach out to a market of 2.2 billion people with a combined economic size of USD26 trillion or 30% of the global economy.
With RCEP, Malaysia is well placed and well connected by extensive international flights to serve as a hub to explore the various economic opportunities. Investors would find the country to be a center for trade and investment that can easily do business with all regions of Asia.
Malaysia and Turkiye: Vibrant Trade Partners
Malaysia and Turkiye have been close partners and brotherly nations since diplomatic relations were established in 1964. Some historians would argue that relations between the peoples of Turkiye and the Malay community went as far as 500 years ago. But what we have seen throughout these enduring relations is that the cultural and economic relations have never wavered.
Malaysia is a trading nation. Its global trade record has continued an upward trajectory standing at USD530 billion in 2021. Bilaterally, economic relations between the two countries have grown from strength to strength. In 2015, the total trade value between both countries was USD1.4 billion, but this figure grew to $4 billion in 2021. Efforts to strengthen trade between the two countries continue with the Malaysian External Trade Development Corporation (MATRADE) leading in this field.
As an agricultural nation, Malaysia is the second-largest exporter of palm oil in the world. This exotic and nutritious plant has been a major ingredient in food products around the world. Companies in Turkiye have been using palm oil in their food industry. In 2021, Malaysia exported more than USD1.06 billion worth of palm oil and palm oil products to support the growing demand, particularly by the Turkish food industry as well as the home and personal care industry.
Malaysia is also a pioneer in the global Halal industry. The Halal industry sector is valued at $7.2 trillion in 2020 and is expected to grow to $11.2 trillion by 2028. The country boasts of having the only comprehensive Halal ecosystem that investors and entrepreneurs should capitalize on.
This includes the halal economic landscape, Islamic financial system and logistics that drive progress and development in the Halal industry.
In retrospect, Malaysia has been a steady importer and user of Turkish technology. This has strengthened defense cooperation between the two Muslim countries. The Malaysian Army has inducted into service Turkish optronic systems, infantry fighting vehicles and armored personnel carriers in the hundreds. These high-end products have been used in defence of Malaysia during the Sulu incursion of Sabah in 2013. This has prompted a bigger Turkish defense companies’ presence at the Defense Service Asia (DSA) in Kuala Lumpur from 28 – 31 March 2022, with the largest display of products and equipment offered for the Asia-Pacific market.
Nonetheless, Turkiye is not only a source of technology but also an important tourist destination to Malaysians. Droves of Malaysians visited Turkiye in 2019, with the number reaching as high as 107,000 visitors, while 15,000 Turks made Malaysia their preferred tourist destination. With the opening of Malaysia’s border and with major airlines connecting the two countries, tourism would be one of the most exciting fields to observe in the forthcoming years.
Trade and Investment Destination
Malaysia is the 25th most competitive economy according to the World Competitive Yearbook in 2021. The country is ranked second in the World Banks’ Ease of Doing business for 2020 in dealing with construction permits and has been identified as the most attractive investment destination for 2022 by the Milken Institute in its Global Opportunity Index 2022.
Despite the challenging global economic landscape, Malaysia’s performance in attracting foreign direct investment continues to be high. In 2021, Malaysia will have recorded an FDI flow of USD73 billion. The figure issued by the Malaysian Investment Development Authority (MIDA) is an astonishing accomplishment, the highest since 2006. Investors from the Netherlands, Singapore, China, Austria and Japan accounted for 89% of the flow of investments. Most of these investments were centered in the manufacturing, services sector and primary industries.
Malaysia is a base for some of the world’s largest high-technology companies. Intel Corporation and Infineon Technologies are some of the major players in semiconductors that have been operating in Malaysia. The British company Rolls Royce has a working partnership in the field of aerospace technology in the country.
Their presence has not gone unnoticed. Turkish Aerospace Industry (TAI) has followed the lead with a foothold by opening a design and engineering office in Malaysia in 2021. Others include Turkish Technics, which has also expanded to Malaysia in the field of aircraft maintenance, repair and overhaul, while Havelsan has been operating in the country for the last few years.
With sound investment policies, a skilled and educated workforce, and with modern infrastructure, Malaysia is expected to continue to attract global investments.
However, this is not to say it is a one-sided affair. Malaysia’s investment in Turkiye is large and substantial, reaching more than USD2.6 billion. The Istanbul Sabiha Gocken (ISG) international airport is one of the landmark symbols of Malaysia – Turkiye business relations that provides employment and careers to hundreds of Turkish people. With better concessions and cooperation, ISG is a success story that should be exemplary to both countries.
The economic potential between Malaysia and Turkiye has only begun to be discovered. As Malaysia opens its border in April, the trade and investment potential Malaysia provides as a gateway to Asia is for Turkish companies and international investors to explore. Connected by Turkish Airlines and other major airlines, Malaysia is an excellent destination for trade and investment and a center for distribution across Asia. The country is also a melting-pot of numerous Asian cultures that a visitor would find colorful and intriguing.
Such people-to-people interaction will spur greater economic opportunities that will present themselves through connections and friendship. As the tagline goes, 'Malaysia is truly Asia.'